More and more Americans can afford to own homes, and the nation is expected to reach record highs in homeownership by the end of the decade. But the increase could widen the gap between suburban homeowners and the inner-city poor, a national housing study warns.
Low interest rates, renewed income growth and moderate increases in housing prices have reversed a 10-year slide in national homeownership rates, says the annual study by the Joint Center for Housing Studies of Harvard University.
Homeownership rates, already rising for most age groups, should reach all-time highs by 2000. In 1993, 64.6 percent of the population owned homes, up from 64.1 percent the previous year -- the first substantial rise in two decades.
Besides lower costs, demographic trends have played a role. An aging baby boom generation has fueled demand for move-up homes, while the tail-end of that generation has found it more affordable to buy first homes. Immigrant families, meanwhile, have elevated themselves into the economic mainstream and bought homes.
Even recent climbs in mortgage rates from 20-year lows last year should be offset by income growth recovery, the study says. With income rising and average mortgage payments decreasing, potential buyers should be better equipped to overcome the primary obstacle to homeownership for many families -- saving money for the down payment and closing costs.
Mortgage payments -- based on a typical starter home purchased in 1977 -- fell from $6,021 in 1989 to $4,261 in 1993, thanks to lower interest rates and moderate inflation in housing, the Harvard study says.
But "The State of the Nation's Housing 1994," sponsored by the Ford Foundation, also points to the down side of renewed growth.
Most new, better-quality single-family homes have been built farther and farther from the central cities, leaving the poor in depressed neighborhoods, with decent housing out of reach for many, the report says.
"For low- and moderate-income renters, lack of savings to cover the down payment and closing costs blocks progress up the housing ladder," said William Apgar, executive director of the center. "And for minority households, discriminatory barriers present further obstacles."
Such factors limit low-income renters' housing choices to poor-quality, high-cost apartments in central cities and in outlying rural areas.
"Even though homeownership has become more affordable, there's no evidence rental housing is becoming more affordable," said Nancy McArdle, a research analyst for the center. She noted that rents paid by poor, nonsubsidized renters were up through 1991, when the latest statistics were available.
Increased isolation of central city tenants could lead to loss of jobs in the city as companies move to the suburbs and more decay as tenants abandon rental units they no longer can afford, Ms. McArdle said.